The operator of Taco Bell, Pizza Hut and KFC restaurants plans to pay shareholders 28.5 cents per share on a quarterly basis, up from its prior payout of 25 cents per share.
At the current share price, the increase will bring Yum's dividend yield to around 2.2% going forward.
The higher dividend is expected to cost Yum another $16.3 million per quarter.
In July, Yum delivered a 10.5% jump in second-quarter earnings to $316 million, or 65 cents per share, while revenue rose 9.7% to $2.82 billion.
Much of its stellar results came from strong revenue in China, where same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- grew 18%, though the key line item fell 4% in the U.S. Fast-food rival
outperformed Yum in the U.S., growing same-store sales by nearly 7%.
CEO David C. Novak said at the time Yum's ability to maintain strong performance and free cash flow allows the company to reward shareholders through "meaningful dividend and share buybacks," even as its top priority continues to be investment in global growth prospects such as China and other emerging markets.
Yum shares rose 2% to close at $53.30 on Wednesday. Earlier in the session, the stock ran as high as $54.05.
--Written by Miriam Marcus Reimer in New York
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